VINACHEM

The world as we know it is increasingly dependent on critical minerals. These elements underpin everything from smartphones and medical devices to electric vehicle batteries and solar panels – and with demand soaring, countries are jostling to protect their supplies of these essential components.

Critical minerals are metallic and non-metallic elements that have proven vital for modern technologies, economies, and national security.

These elements are highly susceptible to supply-chain disruption due to scarcity, geopolitical tensions, and other risk factors.

Without these must-have minerals, modern civilization would struggle to function, and the green transition would be rendered nigh-on impossible.

What are critical minerals used for?

In today's world, critical minerals power a variety of technologies that have become indispensable to modern life. These include smartphones, medical devices, and components required to generate renewable energy.

They're also used in the manufacture of steel, cement, glass, semiconductors, magnets, fiber optic cables (and other telecoms technologies), lasers, weapons (and other defense materials), commercial aircraft, nuclear reactors, laptops, fertilizer... And a whole lot more.

How many critical minerals are there?

What is (or isn't) deemed a critical mineral varies from country to country. The most recent list published by the US Geological Survey identifies 50 of them. The EU equivalent consists of 34, while Japan has designated the same number of "rare metals."

Australia and Canada both identify 31 critical minerals, though their lists aren't identical; for example, arsenic is considered essential in the former but not the latter. Meanwhile, India's list comprises 30 critical minerals, China's includes 24, and the UK version is made up of just 18.

What are the most crucial critical minerals?

Let's break it down. There are 10 critical minerals that the US, EU, and China have all identified: aluminum/bauxite, antimony, cobalt, copper, fluorspar, graphite, lithium, nickel, rare earths, and tungsten.

The International Energy Agency (IEA) has said that four of these 10 minerals are essential for the green energy transition: lithium, cobalt, copper, and nickel.

Lithium

Arguably the most important critical mineral, this soft, silvery element – which has the lowest density of all the metals – is an essential component of batteries that power electric vehicles, smartphones and laptops, medical devices, drones, and satellites.

Lithium is combined with aluminum and magnesium to make alloys used in aircraft and high-speed trains; compounds of the element are also used in air conditioning units and industrial lubricants. In addition to that, lithium compounds feature in medicines and are used to treat bipolar disorder and act as a mood stabilizer.

Lithium demand

Between 2017 and 2022, the demand for lithium tripled in tandem with the growing market for lithium-ion batteries.

In 2030, the demand for lithium carbonate equivalent (LCE), an industry term used to classify lithium content, is expected to surpass 2.4 million metric tons. That's double the figure forecast for 2025.

Leading lithium producers

Australia reigns supreme as the world's number one lithium producer. Last year, the global leader produced 86,000 metric tons of the mineral, almost double the quantity mined by runner-up Chile, which produced 44,000 metric tons and has the world's largest reserves.

China is the next biggest, having produced 33,000 metric tons of lithium in 2023. However, in terms of companies, America's Albemarle is the largest producer, followed by Chile's SQM and Chinese firm Tianqi Lithium.

Cobalt

Cobalt derives its name from the German word for "goblin." This is because it can easily be mistaken for silver and emits toxic fumes when burned, which led 16th-century Saxon miners to associate it with the mythical creature.

Whereas it was once predominantly used to produce paints, jewellery, and coloured glass, cobalt is now a vital component of lithium-ion batteries.

Cobalt demand

Demand for cobalt rocketed by 70% between 2017 and 2022. From now until the end of the decade, demand for the critical mineral is expected to double, buoyed by a surging need for electric vehicle batteries.

By 2030, battery demand for cobalt is expected to reach 320 million metric tons. This will represent 84% of the total cobalt demand, up from 75% in 2023.

Leading cobalt producers

The Democratic Republic of the Congo (DRC) is the world's largest cobalt producer by a long shot, accounting for more than 70% of global production. Operations in the African country are highly controversial; the industry is associated with human trafficking, modern-day slavery, and child labour, among other human rights abuses.

In 2022, Indonesia surpassed Australia and the Philippines to become the world's second-biggest cobalt producer after tripling its production of the element. In terms of companies, China's CMOC Group is likely to be this year's largest producer, overtaking Swiss multinational mining giant Glencore.

Copper

Copper has been used by humans for thousands of years and is now the world's third-most consumed metal. Thanks to its malleability, durability, and conducting properties, the element is an essential component of electrical equipment.

This means it's vital for the green energy revolution. Without it, electric vehicles, wind turbines, solar panels, and other renewable energy technologies simply wouldn't exist.

Copper demand

Annual demand for this essential metal is expected to reach over 36.6 million metric tons by 2031, up from around 25 million metric tons in 2020, according to American management consultancy firm McKinsey.

Worryingly, the world's copper supply is expected to be 30.1 million metric tons in 2031, leaving a shortfall of around 6.5 million metric tons. To make matters worse, the demand is only expected to increase, with a staggering 50 million metric tons required by 2035.

Leading copper producers

Chile is currently the world's leading copper source by a wide margin, producing 5.3 million metric tons of the metal last year. Peru was next with 2.6 million metric tons, followed by China with 1.7 million metric tons.

But when it comes to companies, America is on top yet again; the three biggest copper producers in the business are America's Freeport-McMoRan, Australian firm BHP, and Chile's Codelco.

Nickel

Thanks to its resistance to corrosion, nickel has long been used for making alloys such as stainless steel.

Much of the technology that drives our modern world contains nickel, including household appliances and smartphones. The metal is becoming increasingly important and is widely used in green technologies such as electric vehicles and wind turbines.

Nickel demand

Unsurprisingly, these uses are driving the demand for nickel. A report published by Global Industry Analysts predicts that nickel demand will hit 3.5 million metric tons by 2030 – up from 1.8 million metric tons in 2022 – as the green transition gathers pace. Mining Weekly believes the demand could be even greater, at 3.8 million metric tons.

Whichever figure is correct, one thing is clear: the rise in demand is likely to lead to supply issues that will require significant price increases or a shift in technology.

Leading nickel producers

Indonesia is the world's largest nickel mining and refining center. Last year, the Southeast Asian nation produced 1.8 million metric tons of the metal, with production rising more than sixfold since 2010.

The Philippines takes second place with 400,000 metric tons, while Russia and the French territory of New Caledonia are placed third and fourth respectively.

China's critical minerals dominance

China currently leads the world in critical mineral processing and is a leading producer of numerous essential elements.

The People's Republic refines around 40% of the world's copper, 59% of its lithium, 68% of its nickel, and 73% of its cobalt. The country is also responsible for processing 85% of rare earths and controls 100% of the planet's refined supply of natural graphite and over 90% of manganese.

China's critical minerals dominance

China's dominance of the global critical minerals industry is a major cause for concern for many Western nations, potentially posing a serious threat to their national security and economic wellbeing.

Disquiet over China's stranglehold came to the fore last year when Beijing restricted exports of gallium and germanium, two key minerals that are critical for defense applications. The US is 100% reliant on China for gallium and 50% dependent on the country for its supplies of germanium.

It's little wonder that the US and its allies are going all out to break China's near-monopoly.

Russia's moves to become a leading critical minerals supplier

Russia is pulling out all the stops to become a major player in the global critical minerals industry, and it's clearly working.

While the EU has hit the country with sanctions as a consequence of Vladimir Putin's invasion of Ukraine, it's refused to impose any penalties against essential elements. Between March 2022 and July 2023, the bloc imported $15 billion worth of critical raw materials from Russia, including vast quantities of nickel and copper.

Moreover, Russia plans to invest $1.5 billion to realize its ambitions of becoming the world's second-biggest producer of rare earths by 2030.

Ukraine War: the world's first lithium conflict?

The war in Ukraine has been described by some analysts as the world's first lithium conflict.

It's believed that the discovery of more than 500,000 metric tons of lithium in Ukraine – the largest reserves of the element in Europe –could have contributed to Putin's decision to invade the country.

Russia's critical minerals resource grab in Africa

In addition to plundering Ukraine's critical mineral resources, Russia is taking a firm grip on Africa's reserves of these precious commodities.

According to internal Russian government documents seen by the BBC, Moscow is picking up where the defunct Wagner Group left off, offering governments on the continent a "regime survival package" in exchange for access to strategically important natural resources.

What is America doing to reduce its dependence on imported critical minerals?

As previously mentioned, the US is dangerously reliant on China for its critical minerals supply. In fact, over 80% of the nation's supply of these crucial elements comes from foreign sources, with China the leading exporter.

In 2021, President Biden signed Executive Order 14017, America’s Supply Chains, which ordered a review of vulnerabilities in America's critical mineral and material supply chains. It recommended massively ramping up domestic production, as well as working with US allies to diversify foreign sources.

What is America doing at home to secure critical mineral supplies?

The Biden administration is investing billions of dollars in the domestic critical minerals industry.

The raft of funding includes $3.5 billion to finance projects that beef up homegrown electric battery manufacturing, while the US Department of Energy has provided $2.8 billion to 20 companies to boost domestic production and processing of critical minerals.

China and America's scramble for Africa's critical mineral reserves

Africa is shaping up as a key battlefield for leading powers eager to get hold of the continent's critical mineral reserves. Although Russia is on a mission to gain control, the real competition is between China and the US.

While China currently has a firm grip on Africa's critical mineral resources, the US is making significant inroads. It recently signed a memorandum of understanding with Zambia to develop a supply chain for electric car batteries.

Together with the EU, America is seeking to revive the 1,200-mile Lobito Corridor railway, which would transport critical minerals from the DRC and Zambia to the Angolan coast, where they can be shipped to western markets.

What more is the EU doing to shore up supplies of critical minerals?

In addition to reviving the Lobito Corridor project, the EU is striving to safeguard supplies of critical minerals.

Approved in December, the bloc's Critical Raw Materials Act sets targets for 17 strategic raw materials. By 2030, the EU aims to mine at least 10% and process 40% of its annual requirements, among other objectives.

India's moves to secure its supply of critical minerals

Likewise, the Indian government is sparing no effort to decrease its reliance on China for critical minerals and secure its supply of the essential elements.

New Delhi's actions include permitting domestic commercial mining of six critical minerals, including lithium and titanium, and forming joint ventures with friendly nations such as Australia to diversify foreign sources.

What is the UK doing to safeguard its supply of critical minerals?

The UK government first published its Critical Minerals Strategy in 2022 and revised it last year.

Like the other countries mentioned, the UK aims to ramp up domestic production and processing and plans to team up with friendly countries to secure supplies.

The government is also working to leverage London's role as the global hub of mining finance and metals trading, with a view to making international markets more responsive, transparent, and responsible.

What is the UK doing to safeguard its supply of critical minerals?

Specific UK funding programs are plentiful and include the $1.1 billion BEIS Automotive Transformation Fund, which is helping to bankroll Green Lithium, the country's first large-scale lithium refinery.

Other related initiatives range from the $445 million Industrial Energy Transformation Fund to the $102 million Driving the Electric Revolution program, which aims to grow the UK's electric vehicle supply chain.

Which countries stand to gain the most from the critical minerals race?

A number of nations are set to benefit big-time from the critical minerals race. For example, Chile is planning to nationalize its immense lithium industry, while Australia, Canada, Indonesia, and Argentina are also likely to profit from their own bountiful reserves and friendly relations with the US.

It's clear there's big money – and even bigger consequences for the planet – at stake, but only time will tell what the industry will look like over the next couple of decades.

– Source: MSN –